Nhu Van is the Operations Director of Mdelta
Vietnam has firmly established itself as a vital manufacturing hub within global supply chains, offering competitive advantages that continue to attract businesses worldwide. As international trade policies evolve, particularly with the new US-Vietnam trade agreement effective July 2025, the criteria for a product to be genuinely “Made in Vietnam” are being clarified. For companies managing complex supply chains, understanding these developments, especially the enhanced focus on origin verification, is crucial for maintaining smooth operations and ensuring compliance.
1. The Evolving Tariff Landscape: Focus on Origin
A key aspect of the recently announced US-Vietnam trade agreement is the introduction of a 40% tariff on goods identified as “transshipped” through Vietnam. This measure is designed to ensure that products claiming Vietnamese origin genuinely reflect substantial transformation within the country, rather than simply being rerouted or undergoing minimal processing to bypass tariffs from other regions.
This development signals a clear emphasis on the authenticity of origin claims, encouraging.
2. Enhanced Verification: A Collaborative Approach
Both US Customs and Border Protection (CBP) and Vietnamese customs authorities are increasing their focus on origin verification.
- Vietnamese Initiatives: Vietnamese customs authorities have increased efforts in origin verification and compliance, addressing instances of trade violations, including cases where goods were routed through Vietnam without genuine transformation or where Certificates of Origin (C/O) were found to be inaccurate. This demonstrates Vietnam’s commitment to strengthening its trade controls and aligning with international standards.
- US CBP Focus: US CBP is enhancing its verification processes, requiring that country-of-origin claims are supported by valid C/O, accurate Harmonized System (HS) code classifications, consistent invoices and shipping documents, and clear product and packaging labels. Discrepancies in these areas may lead to additional review, potential delays, or adjustments in tariff application.
This collaborative emphasis on origin verification means companies need to ensure their practices meet the requirements of both Vietnamese and US regulations.
3. Defining “Substantial Transformation”
The core principle is clear: for goods to be labeled “Made in Vietnam,” they should undergo substantial production or transformation within Vietnam. Simple repackaging or minor assembly is generally not considered sufficient to confer Vietnamese origin under these updated guidelines.
For instance, the agreement includes enhanced declaration and approval procedures for dual-use goods like semiconductors, reflecting commitment to robust origin verification processes.
4. Practical Considerations for Your Business
For businesses engaged in sourcing from Vietnam, these developments highlight key areas for strategic focus:
- Supply Chain Transparency is Key: It is increasingly important to have a clear, compliant, and fully traceable supply chain. This involves understanding each step of your production process and the origin of all components.
- Strategic Sourcing and Manufacturing Review: If your current strategy involves minimal processing in Vietnam for goods with significant content from other countries, it may be beneficial to review and adapt your sourcing and manufacturing approaches. This could involve exploring opportunities to localize more production and sourcing within Vietnam.
- Meticulous Documentation Practices: Every shipping label, invoice, and package serves as a compliance checkpoint. Ensuring all documentation is consistent, accurate, and aligns with country-of-origin requirements is vital. This includes standardizing bilingual invoices, matching documents across packing, shipping, and labeling, and preparing for audits with comprehensive digital records.
- Validating Certificates of Origin (C/O): Beyond simply obtaining a C/O, it is important to validate its accuracy and ensure it is supported by genuine transformation within Vietnam. 7
- Enhanced Due Diligence: Conduct thorough due diligence on your manufacturing partners in Vietnam to confirm their adherence to the new origin rules.
5. Mitigating Risks and Ensuring Smooth Operations
While the 40% tariff on transshipped goods is a significant factor, non-compliance can also lead to other challenges, including additional reviews, potential delays, and adjustments in tariff application. Ensuring compliance is crucial to avoid potential disruptions and unexpected costs.
Vietnam continues to be a strategically important manufacturing hub, offering advantages such as competitive production costs and opportunities for supply chain diversification. The evolving trade landscape emphasizes the need for a proactive, compliance-focused approach. By understanding and adapting to the evolving “Made in Vietnam” requirements and origin verification processes, your company can navigate these changes successfully, manage risks, and continue to leverage Vietnam’s potential in the global market.
What are the implications if you are producing to export to several markets (i.e. including the EU), or only the EU?
→ That MDelta has expertise to support the production footprint set up and management in Vietnam.